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Scandal-hit telecoms outfit Worldcom - aka MCI - is once again able to carry out US Government contracts after being excluded from bidding for work.

Last summer, US procurement agency, the General Services Administration (GSA), barred MCI/Worldcom from bidding for new federal contracts, ruling that the telco giant "had not adequately addressed its material accounting and business ethics weaknesses".

The company was dropped from the list of firms able to take-on federal contracts, following its $11 billion accounting scandal.

Yesterday, though, the GSA confirmed it had lifted the sanctions against MCI/Worldcom and removed the company from the "excluded parties list", after deciding that the telco had now improved financial controls and business ethics.

In a letter to MCI/Worldcom, GSA's Suspension and Debarment Official, Joseph A. Neurauter, wrote: "I have concluded that the protection of the government's interest does not require the debarment of WorldCom. Accordingly, I have terminated the debarment proceedings against WorldCom.

However, the GSA insists it will still keep tabs on MCI/Worldcom for the next three years just to make sure the company doesn't make any more "ethical" slip-ups.

Welcoming the decision, MCI chairman and CEO, Michael Capellas, said that the company and its employees had taken "extensive steps to ensure the company operates with the utmost integrity".

"We have worked diligently to fulfil all of the ethics and internal controls criteria necessary to being a good federal government contractor. We enhanced our corporate ethics program and accounting controls, hired a new Chief Ethics Officer and completed company-wide ethics training.

"Today's GSA decision is a sign of confidence in the new MCI. Our employees are grateful to be eligible for new government business and contract extensions again," he said.

But the move has come in for a bashing from watchdog group, Citizens Against Government Waste (CAGW).

"This punishment amounted to nothing more than a slap on the wrist," said CAGW President Tom Schatz.

"Other companies, including Enron and Arthur Andersen, who committed similar acts received much stiffer penalties. If GSA truly wanted what was in the best interests of taxpayers, they would have permanently debarred MCI," he said. ®